Between 1980 and 2000, the Standard Deviation of the Returns

question 2

Multiple Choice

Between 1980 and 2000, the standard deviation of the returns for the NIKKEI and the DJIA indexes were 0.08 and 0.10, respectively, and the covariance of these index returns was 0.0007. What was the correlation coefficient between the two market indicators?

• A) .0906
• B) .0985
• C) .0796
• D) .0875
• E) .0654

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Definitions:

Initial Cost

The upfront expenditure related to acquiring or starting a new project or investment, not including ongoing or future costs.

Risk Level

A measure of the uncertainty associated with achieving return objectives within investing, often determined by the volatility in asset prices and market fluctuations.

Project Life

The duration from the initiation to the conclusion of a project, encompassing all stages of development and execution.

OTC Market

Over-the-counter market, where securities are traded directly between parties without the supervision of an exchange.